ECO 372 Final Exam | ECO 372 Final Exam Questions and Answers | Assignment E Help

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In expectation of increased spending, too many entrepreneurs would begin businesses and most would fail. The cost of repricing goods would increase costs, and therefore reduce profits, for businesses and they would cut production. People would drop out of unions because unions would become ineffective at keeping wages of members high. Consumers might expect prices to fall further and cut back consumption now. 12.When interest rates rise, people are: More likely to borrow, that is, purchase a financial asset. More likely to borrow, that is, sell a financial asset. Less likely to borrow, that is, sell a financial asset. Less likely to borrow, that is, purchase a financial asset. 13. According to the Classical growth model, an economy that increases its saving will grow: Quickly since the increase in saving will permit greater investment. Quickly since the increase in saving will permit more rapid technological progress. Slowly because interest rates will fall, causing investment to decline. Slowly because consumption and aggregate demand will be reduced. 14.Suppose that consumer spending is expected to decrease in the near future. If output is at potential output, which of the following policies is most appropriate according to the AS/AD model? A reduction in government spending An increase in taxes An increase in government spending No change in taxes or government spending
15. Which of the following topics is best characterized as a macroeconomic issue? The effect of a drought on the price of corn The decision by Apple to produce fewer Macintosh computers The effect of an increase in federal spending on the unemployment rate The choice a student makes in selecting college course 16. If income increases more rapidly than expected, then: Estimates of the target rate of employment are likely to increase. The budget is less likely to be in surplus. Tax revenues will be lower than expected. Spending on income-support programs will likely be lower than expected. 17. In which of the following situations is a budget surplus most likely to occur? When fiscal policy is contractionary and the economy is expanding When fiscal policy is expansionary and the economy is contracting When fiscal policy is expansionary When the economy is contracting 18. The largest expenditure component of GDP is: Government spending Net exports Investment Consumption 19. Which of the following is the path through which contractionary monetary policy works? Money down implies interest rate up implies investment up implies income down.
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ECO 372 Final Exam | ECO 372 Final Exam Questions and Answers | Assignment E Help

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